Rakesh Jhunjhunwala portfolio stock Federal Bank shares were up over 1 per cent at Rs 86.70 apiece on BSE in intraday deals on Monday. Federal Bank stock price has nearly doubled in less than a year, rising over 90 per cent from its 52-week low. At least three research and brokerage firms have recommended to buy Federal Bank stocks, and expect it to rally up to 28 per cent from the current levels. However, the stock is off 6.5 per cent from its 52-week high of Rs 92.40, hit in March this year. Analysts see Federal Bank as a good stock in medium-to-long-term investment. “The return on equity on this stock has been stable at around 8-10% since FY17 and the price to book value also shows that the Federal Bank shares are fairly valued,” Vishal Balabhadruni, Banking Analyst at CapitalVia Global Research, told Financial Express Online.
In the traded volume terms, nearly 2 lakh shares have exchanged hands on BSE and a total of 46.57 lakh units on NSE, so far in the day on Monday. At the end of the March 2021 quarter, ace investor Rakesh Jhunjhunwala held 4.72 crore shares or a 2.40 per cent stake in Federal Bank. In the December 2020 quarter also, Jhunjhunwala held a 2.40 per cent stake in Federal Bank.
Federal Bank, in its annual report of FY21, highlighted the progress in strengthening the balance sheet and the focus on building its gold loans portfolio, along with the newly launched credit card product. Analysts at Motilal Oswal Financial Services noted that Federal Bank delivered a strong core operating performance and healthy business trends across both advances and deposits. Analysts added that the business outlook remains modest and the bank would grow in a calibrated manner, and the emphasis will continue to be on sustained earnings.
The brokerage firm has recommended to buy Federal Bank stock, and expect the stock to rally up to Rs 110 per share, a 28 per cent rally from current levels. “The bank has recently announced a capital infusion of Rs 916 crore (from IFC) and proposed to augment its capital base further via various routes even as the current CAR remains comfortable,” analysts at Motila Oswal said.
Those at HDFC Securities Institutional Equities have revised target price to Rs 98, from Rs 97, earlier, implying an upside of 14.35 per cent. Analysts at the research and brokerage firm said the recent equity infusion by IFC offers much-needed long-term patient capital and a formidable competitive advantage to opportunistically capitalise on potential growth opportunities. “We incorporate the recent equity infusion and revise FY22/FY23E PAT forecasts upwards by 1 per cent each and maintain buy with a revised target price of Rs 98 (earlier Rs 97),” they added.
Angel Broking also sees a 28 per cent rally in Federal Bank stock price as it believes that the bank’s provisioning coverage ratio (PCR) at 67 per cent is adequate.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)